What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-07-27 compared with 2026-04-30 · 412 added, 148 removed, 1025 unchanged (35% of the section changed)

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Our independent subsidiaries, each of which strive to be the operation of choice in the communities they serve, provide a broad spectrum of services.

As of March 31, 2026, we offered skilled nursing, long-term acute care, senior living and rehabilitative care services through 378 skilled nursing and senior living facilities.

As of June 30, 2026, we offered skilled nursing, long-term acute care, senior living and rehabilitative care services through 396 skilled nursing and senior living facilities.

Our real estate portfolio includes 181 owned real estate properties, which includes 142 facilities operated and managed by us, 39 operations leased to and operated by third-party operators and the Service Center location.

Of the 39 third-party operations, one senior living operation is located on the same real estate property as a skilled nursing operation that we own and operate.

The following table summarizes our independent subsidiaries and operational skilled nursing beds and senior living units by ownership status as of March 31, 2026:

The following table summarizes our independent subsidiaries and operational skilled nursing beds and senior living units by ownership status as of June 30, 2026:

Owned and Operated Leased (with a Purchase Option) Leased (without a Purchase Option) Total for Facilities Operated

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Refer to Results of Operations for further discussion.

Operational Expansions — During the three months ended March 31, 2026, we expanded our operations with the addition of five stand-alone skilled nursing operations in three states.

Operational Expansions — During the six months ended June 30, 2026, we expanded our operations with the addition of 21 stand-alone skilled nursing operations and two campus operations in four states.

These new operations added a total of 2,724 operational skilled nursing beds operated by our independent subsidiaries.

In the same period, we entered into definitive agreements to acquire 15 stand-alone skilled nursing operations and two campus operations in Texas on May 1, 2026, subject to customary closing conditions.

Assuming the closing of the acquisitions, these new operations will add 2,080 operational skilled nursing beds and 155 senior living units to be operated by our independent subsidiaries.

These acquisitions establish Texas as our largest state by skilled nursing and senior living operations, totaling 105 operations, and reaffirm our continued growth in the markets where we began in 1999.

Twenty of our expansions were in Texas, establishing it as our largest market with 105 skilled nursing and senior living operations and reinforcing our continued growth in the state where we began in 1999.

Subsequent to June 30, 2026, we expanded our presence with the addition of two stand-alone skilled nursing operations in Texas, and these new operations will add 250 operational skilled nursing beds to be operated by our independent subsidiaries.

Standard Bearer Acquisitions — Standard Bearer Healthcare REIT, Inc.

(Standard Bearer), our captive REIT, is a holding company with subsidiaries that own a majority of our real estate portfolio.

Management believes that the REIT structure enhances transparency into the value of the Company’s owned real estate and provides an efficient platform to support future property acquisitions, which may be operated by the our independent subsidiaries or leased to third‑party operators.

During the three months ended March 31, 2026, Standard Bearer added $17.5 million of real estate assets associated with two stand-alone skilled nursing operations operated by our independent subsidiaries .

In addition, during the same period, two stand‑alone skilled nursing operations owned by Standard Bearer were transitioned from third‑party operators to our independent subsidiaries.

In addition, during the three months ended March 31, 2026, we entered into definitive agreements to acquire real estate assets associated with 19 operations subsequent to March 31, 2026, subject to customary closing conditions, for an aggregate purchase price of approximately $342.4 million.

The real estate assets are associated with 15 stand-alone skilled nursing operations and two campus operations to be operated by our independent subsidiaries and two stand-alone senior living operations to be leased to a third-party operator beginning on May 1, 2026, in each case, assuming the closing of the acquisitions.

Management believes that the REIT structure enhances transparency into the value of the Company’s owned real estate and provides an efficient platform to support future property acquisitions, which may be operated by our independent subsidiaries or leased to third‑party operators.

During the six months ended June 30, 2026, Standard Bearer added $374.6 million of real estate assets associated with 18 stand-alone skilled nursing operations, three stand-alone senior living operations and two campus operations.

Of these additions, three stand-alone senior living operations are leased to a third-party operator and the remaining additions are operated by our independent subsidiaries.

Subsequent to June 30, 2026, Standard Bearer added approximately $36.0 million real estate assets associated with two stand-alone skilled nursing operations operated by our independent subsidiaries.

Common Stock Repurchase Program — On May 13, 2026, the Board of Directors approved a stock repurchase program pursuant to which we are authorized to repurchase up to $40.0 million of our common stock under the program for a period of approximately 12 months from June 12, 2026.

On June 12, 2026, the Board of Directors approved an amendment to the stock repurchase program pursuant to which we are authorized to repurchase an additional $60.0 million of our common stock under the program.

During the three months ended June 30, 2026, we repurchased 257 shares of our common stock for $40.0 million.

As of June 30, 2026, $60.0 million remained authorized and available for repurchase under the stock repurchase program.

Facility Information

The following table sets forth the location of our facilities and the number of operational beds and units located at our skilled nursing, senior living and campus facilities as of March 31, 2026:

The following table sets forth the location of our facilities and the number of operational beds and units located at our skilled nursing, senior living and campus facilities as of June 30, 2026:

Facility Counts Bed / Unit Counts

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Tennessee 11 — — 11 1,122 — 1,122

South Carolina 9 — — 9 1,126 — 1,126

Iowa 8 — 2 10 664 31 695

South Carolina 9 — — 9 1,126 — 1,126

Nebraska 4 1 3 8 496 199 695

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(1) Campuses represent facilities that offer both skilled nursing and senior living services.

The following table provides summary information regarding the location of our owned and operated real estate properties as of March 31, 2026:

The following table provides summary information regarding the location of our owned and operated real estate properties as of June 30, 2026:

Facility Counts Bed / Unit Counts

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Wisconsin 5 — — 5 350 — 350

Iowa 4 — — 4 296 — 296

Nebraska 1 1 1 3 171 160 331

Tennessee 3 — — 3 300 — 300

Iowa 3 — — 3 234 — 234

Alaska 1 1 — 2 146 82 228

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(1) Campuses represent facilities that offer both skilled nursing and senior living services.

The following table provides summary information regarding the location of our owned real estate properties as of March 31, 2026:

The following table provides summary information regarding the location of our owned real estate properties as of June 30, 2026:

Owned and Operated by Ensign (1)

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The following table summarizes our overall skilled mix from our skilled nursing services for the periods indicated as a percentage of our total skilled nursing routine revenue and as a percentage of total skilled nursing patient days:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Days 31.0 % 30.8 % 31.5 % 31.1 %

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The following table summarizes our overall occupancy statistics for skilled nursing operations for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

Occupancy for skilled services:

2026 2025 2026 2025

Operational beds at end of period 40,711 35,545 40,711 35,545

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The following tables set forth our total service revenue by payor source generated by our skilled services segment and our "All Other" category and as a percentage of total revenue for the periods indicated (dollars in thousands):

Three Months Ended March 31,

Three Months Ended June 30,

Skilled Services All Other (3)

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TOTAL SERVICE REVENUE $ 1,379,912 $ 1,173,576 $ 52,585 $ 47,838 $ 1,432,497 $ 1,221,414

Three Months Ended March 31,

Three Months Ended June 30,

Skilled Services All Other (3)

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(3) All Other incorporates intercompany eliminations.

Six Months Ended June 30,

Skilled Services All Other (3)

Total Service Revenue

2026 2025 2026 2025 2026 2025

$ 1,081,921 $ 917,315 $ 28,348 $ 22,373 $ 1,110,269 $ 939,688

Medicare 675,479 578,868 — — 675,479 578,868

Medicaid-skilled 155,902 144,758 — — 155,902 144,758

Subtotal $ 1,913,302 $ 1,640,941 $ 28,348 $ 22,373 $ 1,941,650 $ 1,663,314

Managed care 526,199 456,712 — — 526,199 456,712

Private and other (2)

271,246 199,477 75,705 68,951 346,951 268,428

TOTAL SERVICE REVENUE $ 2,710,747 $ 2,297,130 $ 104,053 $ 91,324 $ 2,814,800 $ 2,388,454

(1) Medicaid payor includes revenue for senior living operations.

(2) Private and other in our "all other" category includes revenue from senior living operations and all revenue generated in our other ancillary operations.

(3) All Other incorporates intercompany eliminations.

Six Months Ended June 30,

Skilled Services All Other (3)

Total Service Revenue

2026 2025 2026 2025 2026 2025

39.9 % 39.9 % 27.2 % 24.5 % 39.4 % 39.3 %

Medicare 24.9 25.2 — — 24.0 24.2

Medicaid-skilled 5.8 6.3 — — 5.6 6.1

Subtotal 70.6 % 71.4 % 27.2 % 24.5 % 69.0 % 69.6 %

Managed care 19.4 19.9 — — 18.7 19.1

Private and other (2)

10.0 8.7 72.8 75.5 12.3 11.3

TOTAL SERVICE REVENUE 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

(1) Medicaid payor includes revenue for senior living operations.

(2) Private and other in skilled services includes private, Veteran Affairs and hospice payors.

In addition, private and other in our "all other" category includes revenue from senior living and ancillary operations.

(3) All Other incorporates intercompany eliminations.

GOVERNMENT REGULATION

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In the ordinary course of business, providers are subject to inquiries, investigations and audits by federal and state agencies related to compliance with participation and payment rules under government payment programs.

These inquiries may originate from the Department of Health and Human Services (HHS), Office of the Inspector General (OIG), state Medicaid agencies, state Attorney Generals, local and state ombudsman offices and the Centers for Medicare and Medicaid Services (CMS) Recovery Audit Contractors, among other agencies.

These inquiries may originate from the Department of Health and Human Services (HHS), Office of the Inspector General (OIG), state Medicaid agencies, state Attorneys General, local and state ombudsman offices and the Centers for Medicare and Medicaid Services (CMS) Recovery Audit Contractors, among other agencies.

In response to the inquiries, investigations and audits, federal and state agencies may impose citations for regulatory deficiencies and other regulatory penalties, including demands for refund of overpayments, expanded civil monetary penalties that extend over long periods of time and date back to incidents prior to surveyor visits, Medicare and Medicaid payment bans and terminations from those programs, which may be temporary or permanent in nature.

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The federal government, through CMS rulemaking, Presidential executive actions or Congressional legislation, and state and local governments have recently released the following proposed or final rulemaking, or administrative actions that may have an impact on our independent Skilled Nursing Facilities (SNFs) or senior living facilities:

Final Rule Updating Health-Care Related Tax Policies — On February 2, 2026, CMS published a final rule, effective April 3, 2026, related to the statistical test used to evaluate state Medicaid health care-related tax waiver requests, implementing requirements codified in the One Big Beautiful Bill (OBBB).

CMS Risk-Based Surveys — In July 2026, CMS announced the nationwide implementation of a Risk-Based Survey (RBS) process for qualifying skilled nursing facilities, effective September 8, 2026.

Under the program, qualifying facilities may undergo a streamlined survey process, while state survey resources are redirected toward complaint investigations and facilities with greater risk indicators.

CMS will also identify qualifying facilities with a high-performing designation on Nursing Home Care Compare.

While the Company continues to evaluate the operational implications of the program, changes in survey and regulatory oversight practices could affect compliance requirements, public quality reporting, and other aspects of facility operations.

Fiscal Year 2027 Skilled Nursing Facility Prospective Payment System Proposed Rule (FY 2027 PPS PR) — In April 2026, CMS released the FY 2027 PPS PR, which outlines proposed changes to SNF payment rates and program requirements beginning October 1, 2026.

CMS is proposing a 2.4% net increase in SNF payment rates, reflecting a 3.2% market basket update offset by a 0.8% productivity adjustment, excluding any adjustments under the SNF Value-Based Purchasing (VBP) Program.

The proposed rule also includes several changes to the SNF Quality Reporting Program (QRP), such as removing COVID-19 vaccination measures beginning in fiscal year 2028, shortening the data submission deadline from 4.5 months to 45 days after each quarter beginning in fiscal year 2029 and requiring SNFs to submit Minimum Data Set (MDS) data for all residents, regardless of payer source beginning in fiscal year 2031.

Additionally, CMS proposes estimated performance standards for the fiscal year 2029 and fiscal year 2030 VBP Program years and updates to certain MDS-based VBP measure snapshot dates to align with the proposed QRP reporting deadlines.

As this is a proposed rule, these provisions remain subject to change pending publication of the final rule later this year.

Final Rule Updating Health-Care Related Tax Policies — In February 2026, CMS published a final rule, effective April 3, 2026, related to the statistical test used to evaluate state Medicaid health care-related tax waiver requests, implementing requirements codified in the One Big Beautiful Bill (OBBB).

In relevant part, this rule limits the circumstances under which states may obtain waivers from CMS to impose taxes that fund state Medicaid programs by assessing taxes that impose a greater burden on Medicaid-participating organizations (whether based on volume or percentage of Medicaid taxable units) than the burden imposed on organizations that do not participate in Medicaid, or have relatively less Medicaid participation.

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Non-MCO provider taxes, including nursing facility taxes, have a compliance deadline of the end of the applicable state fiscal year ending in calendar year 2028 (no later than September 30, 2028).

Federal Nurse Staffing Legislation — Following the repeal of the federal minimum staffing requirements in December 2025, there has been legislation introduced in Congress, that if enacted, would impose mandatory minimum staffing requirements for skilled nursing facilities participating in the Medicare and Medicaid Programs.

Controlled Substances Act Telemedicine Flexibilities — On December 31, 2025, the Drug Enforcement Administration (DEA) in coordination with the HHS, issued a fourth extension of certain telemedicine flexibilities related to the prescribing of controlled substances, extending these provisions through December 31, 2026.

Under the Ryan Haight Online Pharmacy Consumer Protection Act of 2008, practitioners are generally required to conduct at least one in-person medical evaluation before prescribing controlled substances to a patient via telemedicine.

Controlled Substances Act Telemedicine Flexibilities — On December 31, 2025, the Drug Enforcement Administration (DEA), working with HHS, extended certain telemedicine flexibilities through December 31, 2026.

Under the Ryan Haight Online Pharmacy Consumer Protection Act of 2008, practitioners must conduct at least one in-person medical evaluation before prescribing controlled substances to a patient via telemedicine.

During the COVID-19 Public Health Emergency (PHE), the DEA temporarily waived this requirement, permitting practitioners to prescribe Schedules II through V controlled substances through audio-only or audio-visual telemedicine encounters, subject to specific conditions.

These exceptions also include FDA-approved narcotic medications classified under Schedules III through V of the Controlled Substances Act when used for maintenance or withdrawal management treatment of opioid use disorder.

The DEA has extended these telemedicine flexibilities several times rather than allowing them to expire, and they may continue beyond 2026 depending on future regulatory decisions.

Consolidated Appropriations Act of 2026 (CAA 2026) — On February 3, 2026, the Consolidated Appropriations Act of 2026 (CAA 2026) was passed, which further extended government funding through September 30, 2026.

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The following provisions of the OBBB are expected to impact Medicaid reimbursement mechanisms and enrollment dynamics relevant to our business.

Moratorium on New or Increased Provider Taxes — Provider taxes, which are state taxes assessed on healthcare providers or facilities, are a commonly used by states to generate non-federal share of Medicaid payments, including payments to SNFs.

Moratorium on New or Increased Provider Taxes — Provider taxes, which are state taxes assessed on healthcare providers or facilities, are commonly used by states to generate non-federal share of Medicaid payments, including payments to SNFs.

Under the ACA, provider taxes were capped at 6% of a provider's net patient revenue.

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In February 2026, CMS issued a final rule implementing these requirements as they pertain to granting state-requested waivers for imposing Medicaid provider taxes to fund those states' Medicaid programs.

See Item 1., Government Regulation, Proposed, Anticipated and Recently Issued Rulemaking and Administrative Actions - Closing a Health Care-Related Tax Loophole Final Rule.

See Item 2., Government Regulation, Proposed, Anticipated and Recently Issued Rulemaking and Administrative Actions - Final Rule Updating Health-care Related Tax Policies.

Medicaid Recertification Changes and Retroactive Eligibility Cut — Beginning in the first quarter of 2027, states must conduct Medicaid eligibility redeterminations every six months, rather than annually, for individuals enrolled under Medicaid.

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SDPs in rating periods beginning on or after March 30, 2026, will not qualify for grandfathering and must immediately comply with the new payment caps based on Medicare payment rates.

On May 22, 2026, CMS published a proposed rule to implement the SDP provisions (the SDP Proposed Rule) included in the OBBB.

Under the proposal, payment limits based on Medicare rates would be expanded to apply to all services covered by SDPs beginning with rating periods on or after January 1, 2029.

The SDP Proposed Rule also applies similar Medicare-based payment caps to certain targeted Medicaid fee-for-service payments.

Cap on Home Equity Excluded for Long-Term Care Eligibility Determination — The OBBB establishes a limit of $1.0 million for home equity that can be exempted from calculating an individual’s eligibility for Medicaid in seeking long-term care beginning January 1, 2028.

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We will continue to monitor any such developments and advocate accordingly at the federal, state and local levels.

Medicare Annual Payment Rule — On April 2, 2026, CMS released the proposed FY 2027 Skilled Nursing Facility Prospective Payment System Final Rule (FY 2027 PPS) which proposes a net 2.4% increase in to the SNF PPS payment rates.

The increase is based on a proposed SNF market basket of 3.2% partially offset by a negative 0.8% productivity adjustment.

CMS did not propose major changes to the Patient‑Driven Payment Model (PDPM), but is seeking public input on whether updates may be needed to address possible case‑mix coding concerns and improve payment accuracy.

CMS is also considering requiring all‑payer Minimum Data Set (MDS) reporting for skilled stays in the future.

In addition, CMS proposed several updates to the SNF Quality Reporting Program (QRP) and SNF Value-Based Purchasing Program (VBP), including the planned removal of two COVID‑19 vaccination measures beginning in fiscal year 2028, changes to data submission deadlines, and updates to performance standards.

CMS is also requesting feedback on alternative wage index approaches designed specifically for skilled nursing facilities.

On July 31, 2025, CMS released the FY 2026 PPS outlining the following key changes:

FY 2026 Final Updates to the SNF Payment Rates — For fiscal year 2026, which began on October 1, 2025 and ends on September 30, 2026, CMS has finalized a 3.2% increase to SNF PPS payment rates.

This increase is based on the final SNF market basket of 3.3%, plus a 0.6% market basket forecast error adjustment, and a negative 0.7% productivity adjustment.

This increase does not incorporate the SNF VBP Program reductions for certain SNFs subject to the net reduction in payments under the SNF VBP.

Patient-Driven Payment Model ( PDPM) ICD-10 code mappings – CMS finalized several technical revisions to the code mappings used to classify patients under the PDPM.

These revisions are intended to enhance the accuracy of patient classification, payment calculations and coding practices under the PDPM.

SNF QRP — CMS has announced changes to the QRP that will take effect for residents admitted on or after October 1, 2025, impacting the FY 2027 SNF QRP.

Specifically, four standardized patient assessment data elements within the Social Determinants of Health (SDOH) category will be removed.

Additionally, CMS has updated the policy and process for submitting reconsideration requests, including amendments and codification of these procedures.

SNF VBP Program — For the FY 2028 and FY 2029 program years, CMS has established performance standards to meet the statutory notice requirements.

Additionally, starting with the FY 2028 program year, CMS will implement the previously established scoring methodology for the SNF Within-Stay Potentially Preventable Readmission (SNF WS PPR) measure, which will be included in the program’s measure set for the first time.

To simplify the scoring process and provide clearer incentives for skilled nursing facilities (SNFs) to enhance the quality of care for all residents, CMS has decided to remove the Health Equity Adjustment.

Furthermore, beginning with the FY 2027 program year, CMS will introduce a reconsideration process.

This process will allow SNFs to request reconsideration if they are dissatisfied with CMS’s decision regarding a review and correction request.

Medicare Annual Payment Rule — The FY 2027 PPS PR is discussed in detail within this Item under the heading Proposed, Anticipated and Recently Issued Rulemaking and Administrative Actions.

FY 2026 Final Updates to the SNF Payment Rates — CMS finalized a 3.2% increase in SNF PPS payment rates for FY 2026 (October 1, 2025 - September 30, 2026).

This update reflects a 3.3% SNF market basket increase, a 0.6% market basket forecast error adjustment and a negative 0.7% productivity adjustment.

This increase does not reflect separate payment adjustments that may apply under the SNF VBP Program.

Patient-Driven Payment Model (PDPM) Updates – CMS finalized several technical revisions to the ICD-10 diagnosis code mappings used within the PDPM.

These revisions are intended to improve the accuracy of patient classification, payment calculations and coding consistency.

SNF QRP — For residents admitted on or after October 1, 2025, CMS finalized changes affecting the FY 2027 SNF QRP.

Specifically, CMS will remove four standardized patient assessment data elements within the Social Determinants of Health (SDOH).

CMS also updated the policy and process for submitting reconsideration requests, including amendments and codification of these procedures.

SNF VBP Program — CMS has established performance standards for the FY 2028 and FY 2029 VBP program years to satisfy statutory notice requirements.

Beginning with FY 2028, CMS will implement the previously finalized scoring methodology for the SNF Within-Stay Potentially Preventable Readmission (SNF WS PPR) measure, which will be included in the program’s measure set for the first time.

To simplify program scoring and strengthen quality improvement incentives, CMS finalized the removal of the Health Equity Adjustment.

In addition, starting with the FY 2027 program year, SNFs will have access to a formal reconsideration process to challenge CMS determinations related to review and correction requests.

Medicare Part B Fee Schedule — On October 31, 2025, CMS issued the CY 2026 Medicare Physician Fee Schedule (CY 2026 PFS) Final Rule, which outlines significant changes aimed at modernizing Medicare, improving care quality, and reducing unnecessary spending.

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This is required under the Medicare Access and CHIP Reauthorization Act (MACRA) depending on whether a provider qualifies as a participant in an AAPM.

CMS finalized a qualifying AAPM participant conversion factor of $33.57, representing a 3.77% increase over the CY 2025 conversion factor of $32.35.

The non-AAPM participant conversion factor is $33.40, a 3.26% increase over such the CY 2025 conversion factor.

CMS finalized a qualifying AAPM participant conversion factor of $33.57, representing a 3.77% increase over the 2025 conversion factor of $32.35.

The non-AAPM participant conversion factor is $33.40, a 3.26% increase over the 2025 conversion factor.

Payment Adjustments — Under the CY 2026 PFS, CMS decreases payments by 2.5% for certain services that are not time-based, such as certain therapy services.

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The measure will track the proportion of healthcare staff vaccinated for COVID-19 and have kept their vaccination status current per the CDC recommendations.

However, this measure may be removed in the future pending final rules published as a result of the FY 2027 PPS.

However, this measure may be removed in the future pending final rules published as a result of the FY 2027 PPS PR.

The FY 2024 PPS also removed the Application of Functional Assessment/Care Plan measures from the SNF QRP.

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This metric highlights the number of patient stays in which SNF patients received the COVID-19 vaccine.

However, this measure may be removed in the future pending final rules published as a result of the FY 2027 PPS.

However, this measure may be removed in the future pending final rules published as a result of the FY 2027 PPS PR.

CMS’s FY 2025 PPS adopted several updates to the SNF QRP aimed at enhancing the integration of Social Determinants of Health (SDOH) into patient assessments and ensuring the accuracy of reported data.

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Additionally, CMS requires that SNFs participating in the SNF QRP undergo a data validation process similar to that already implemented in the SNF VBP Program.

Starting in FY 2026, SNFs participating in the SNF QRP program will be required to take part in a validation program similar to that used for SNFs participating in the SNF VBP Program.

Beginning in FY 2026, SNFs participating in the SNF QRP program are required to take part in a validation program similar to that used for SNFs participating in the SNF VBP Program.

Each year, 1,500 SNFs will be randomly chosen to submit MDS records for review.

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failure to do so will result in noncompliance and a 2% reduction in Medicare reimbursement for that fiscal year.

Additionally, as outlined in the FY 2026 PPS, four standardized patient assessment data elements within the SDOH category will be modified for residents admitted on or after October 1, 2025, impacting the FY 2027 SNF QRP.

CMS has also finalized changes to the reconsideration request policy and process, formally amending and codifying procedures related to QRP data and evaluations.

Additionally, as outlined in the FY 2026 PPS, four standardized patient assessment data elements within the SDOH category were modified for residents admitted on or after October 1, 2025, with implications for the FY 2027 SNF QRP.

CMS also finalized changes to the reconsideration request policy and process, formally amending and codifying procedures related to QRP data and evaluations.

Home Health and Hospice Payment Rules Affecting SNFs — CMS’s final payment rules for other modalities of care delivery also affect the operations of SNFs.

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The purpose of these RADV audits is to maintain the accuracy of risk-adjusted payments made to Medicare Advantage organizations.

In 2024, CMS issued a new prescription drug event (PDE) reporting requirements for PACE organizations to receive manufacturer discounts for drugs provided through Medicare Part D as provided for in the Inflation Reduction Act of 2022 (IRA).

The additional PDE information must be submitted beginning January 1, 2025.

In June of 2024, CMS also updated its statement of rights for PACE participants.

Decisions Regarding Skilled Nursing Facility Payment

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CMS has historically issued guidance and direction around arbitration that must be satisfied for any admission agreement to be enforceable.

Phase 2 and 3 of the Requirements of Participation focuses on:

Phase 2 and 3 of the Requirements of Participation focus on:

(1) resident abuse and neglect;

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(b) the use of Medicaid supplemental payments for use in satisfying the state’s obligations to pay nursing facilities any amounts due under the state’s nursing facility upper payment limit;

and (3) the assessment of the implementation of the Special Focus Facility Program for nursing facilities based on facilities that participated in the program from 2013 through 2022.

and (c) the assessment of the implementation of the Special Focus Facility Program for nursing facilities based on facilities that participated in the program from 2013 through 2022.

The OIG continues to increase its oversight of skilled nursing facility operations through its active Work Plan, with several new audits and studies that may impact SNFs.

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OIG announced in February of 2026 that it would be studying the efficacy and performance of nursing home pharmacy services' internal controls to prevent the diversion, misuse, and over-use of opioids in the nursing home setting.

Subsequently, on May 28, 2026, the OIG issued its Spring 2026 semiannual report to Congress, identifying an estimated $462 million in potential overpayments based on stroke diagnoses that were incorrectly submitted to CMS.

The report also outlined recommendations and control measures intended to improve data accuracy and reduce risks of future overpayments resulting from inaccurate clinical reporting.

Our business model is based in part on serving higher acuity patients.

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The Five Star Quality Ratings incorporated staffing data such as staff tenure and SNF weekend staffing beginning with the October 2022 refresh of the Nursing Home Compare website.

In June 2025, CMS announced upcoming modifications to Nursing Home Care Compare platform and the Five Star Quality Rating system, set to take effect on July 30, 2025.

In June 2025, CMS made changes to the Nursing Home Care Compare platform and the Five Star Quality Rating system.

Under these changes, CMS discontinued the use of the third most recent standard health survey in calculating the health inspection rating, relying instead on only the two latest surveys.

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Ownership Transparency Final Rule — In November 2023, CMS finalized a rule requiring SNFs to publicly disclose information regarding their ownership and management structure.

SNF must identify any person or legal entity that:

SNFs must identify any person or legal entity that:

(1) exercises financial, operational, or managerial control over any facility or part of a facility, or provides services to facility that includes its policies and procedures or cash management services;

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Regulations Regarding Financial Arrangements

We are also subject to federal and state laws that regulate financial arrangement by and between healthcare providers, such as the federal and state anti-kickback laws, the Stark laws, and various state anti-referral laws.

We are also subject to federal and state laws that regulate financial arrangements by and between healthcare providers, such as the federal and state anti-kickback laws, the Stark laws, and various state anti-referral laws.

The Social Security Act prohibits the knowing and willful offer, payment, solicitation, or receipt of any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce the referral of an individual, in return for recommending, or to arrange for, the referral of an individual for any item or service payable under any federal healthcare program, including Medicare or Medicaid.

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Similarly, the state-level HSR analogues require parties to notify state authorities and secure approval before finalizing mergers or acquisitions.

This regulatory trend has accelerated in 2025, with more states actively considering or enacting such legislation.

This regulatory trend has accelerated in 2025 and 2026, with more states actively considering or enacting such legislation.

In some cases, state requirements align closely with the federal HSR Act, simply requiring that a copy of the federal HSR filing be submitted to a designated state agency.

However, other states have established distinct or more rigorous standards, sometimes necessitating state approval for transactions that would not trigger federal reporting obligations under the HSR Act.

Among the states where we operate, California implemented its relevant laws in 2024, and Washington expanded the scope of its HSR-like requirements with new legislation effective July 27, 2025.

Nevada, while it did not pass a comprehensive HSR when proposed in 2025, does require notification or approval for certain healthcare transactions prior to closing.

These evolving state regulations add new layers of compliance for mergers and acquisitions, particularly in the healthcare sector.

Several states in which we operate, including California, Washington, Nevada, Oregon, and Colorado, have implemented or expanded healthcare transaction review and notification requirements.

These evolving regulations may increase the timing, complexity, and compliance obligations associated with healthcare mergers and acquisitions, including certain skilled nursing facility transactions.

California Office of Health Care Affordability

The California Office of Health Care Affordability (OHCA) requires healthcare entities to provide OHCA with written notice of proposed qualifying agreements or transactions (referred to as a “Material Change Notice”) at least 90 days prior to entering into the agreement or transaction.

The California Office of Health Care Affordability (OHCA) requires for-profit healthcare entities to provide OHCA with written notice of proposed qualifying agreements or transactions (referred to as a “Material Change Notice”) at least 90 days prior to entering into the agreement or transaction.

Reportable transactions are determined based on a variety of factors outlined in the applicable regulations.

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We have also requested that OHCA be ordered to withdraw the subpoena and close the inquiry, so the underlying transaction can be completed.

California Department of Justice - Office of the Attorney General

Under the California Corporations Code, any sale, transfer, or change of control of a nonprofit health facility (e.g., general acute care hospitals or skilled nursing facilities licensed for 24-hour care) to a for-profit entity requires prior written notice to and approval/consent from the California Attorney General (AG).

The AG reviews the transaction to determine if it is in the public interest.

Key factors considered include:

whether the deal is fair and reasonable to the nonprofit and at fair market value;

no private inurement or breach of trust;

impact on the availability, affordability, accessibility, and quality of healthcare services in the affected community;

and potential effects on competition and any cultural interests served by the facility.

The process typically includes:

public notice and opportunity for comments;

a public meeting;

and possible independent health care impact statements.

The AG may approve the transaction unconditionally, approve it with conditions (e.g., commitments to maintain services, charity care levels, or community benefits), or deny the transaction if it fails the public interest test.

Americans with Disabilities Act (ADA)

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RESULTS OF OPERATIONS

Our total revenue for the three months ended March 31, 2026 increased $216.2 million, or 18.4%, compared to the three months ended March 31, 2025, while our diluted GAAP earnings per share grew by 21.9%, from $1.37 to $1.67, compared to the three months ended March 31, 2025.

Our Same Facilities occupancy increased by 2.3% to 84.3% during the three months ended March 31, 2026 compared to the same period in 2025, demonstrating our ability to gain additional market share even at our more mature operations.

Our total revenue for the three months ended June 30, 2026 increased $212.7 million, or 17.3%, compared to the three months ended June 30, 2025, while our diluted GAAP earnings per share grew by 16.7%, from $1.44 to $1.68, compared to the three months ended June 30, 2025.

Our Same Facilities occupancy increased by 2.7% to 84.1% during the three months ended June 30, 2026 compared to the same period in 2025, demonstrating the increase in demand in our services and our ability to gain additional market share at our more mature operations.

Further, our Transitioning Facilities occupancy increased by 2.3% to 84.7% compared to the same period in 2025, highlighting our ability to organically grow and transform underperforming operations that we have acquired.

Throughout most of our history, our operating results have been affected by seasonal fluctuations in occupancy and patient acuity, which are most notable when comparing the summer and winter months.

For skilled nursing occupancy and skilled mix, we typically experience stronger occupancy and acuity during the first and fourth quarters and softer demand in the second and third quarters.

Additionally, our recently acquired facilities typical include operations that historical have had lower occupancy and skilled mix at the time of acquisition.

As these operations become "operations of choice" within their respective healthcare markets, we generally experience increases in both occupancy and skilled mix.

We have continued to make progress on targeted initiatives related to increasing occupancy and the level of acuity and complexity of the patients we serve in our facilities, attracting and developing our people and acquiring underperforming skilled nursing operations and integrating them with our proven cultural and operational principles.

During the three months ended March 31, 2026, we added 5 new operations.

Throughout most of our history, operating results have been influenced by seasonal fluctuations in occupancy and patient acuity, most notably between the summer and winter months.

Skilled nursing occupancy and skilled mix are typically strongest in the first and fourth quarters and softer in the second and third quarters.

As expected, sequential seasonal trends resulted in lower occupancy and skilled mix during the period.

Despite seasonal trends, both metrics exceeded our expectations, reflecting the strength of our clinical programs, local leadership teams, and disciplined operating model.

The resulting period over period progress, demonstrates our continued execution on targeted initiatives related to increasing occupancy and the level of acuity and complexity of the patients we serve in our facilities.

We believe these capabilities, combined with our continued investment in people and our proven approach to acquiring and improving underperforming operations, position us well for sustained long-term growth.

Because Recently Acquired Facilities typically operate at lower occupancy and skilled mix levels, acquisition activity may temporarily reduce our overall metrics.

These metrics tend to improve over time as they become operations of choice within their local healthcare markets.

Accordingly, occupancy and skilled mix may vary from period to period based on the number, size, and operating characteristics of facilities we acquire.

During the six months ended June 30, 2026, we added 23 new operations.

We continue to generate healthy growth in both revenue and overall results as we continue to work diligently with existing and recently acquired operations, so that each operation can reach its full clinical and financial potential.

We believe our ability to consistently improve clinical outcomes, enhance operational performance, and successfully integrate acquisitions supports our mission of delivering high-quality care while creating sustainable long-term value.

Our strength remains in our operating model, which empowers each operator to form their own market-specific strategy and adjust to the needs of their local medical communities, including methods for attracting new healthcare professionals into our workforce and retaining and developing existing staff.

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The following table sets forth details of operating results for our revenue, expenses and earnings and their respective components, as a percentage of total revenue for the periods indicated:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Service revenue 99.4 % 99.5 % 99.5 % 99.5 %

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Other expense

0.6 0.5 0.2 0.3

OTHER INCOME, NET 0.8 % 0.7 % 0.5 % 0.6 %

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Net income attributable to The Ensign Group, Inc.

Three Months Ended March 31,

6.9 % 6.9 % 7.0 % 6.9 %

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

SEGMENT INCOME (1)

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Standard Bearer (2)

12,070 9,126 22,879 17,709

NON-GAAP FINANCIAL MEASURES:

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Adjusted Earnings Per Share

1.92 1.59 3.77 3.11

EBITDA 162,284 134,858 314,965 260,704

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Adjusted EBT is income before provision for income taxes adjusted for non-core business items, which for the reported periods includes, to the extent applicable:

These items are generally infrequent or variable in nature, or do not represent current operating activities.

• stock-based compensation expense;

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• costs incurred related to system implementations;

• loss on long-lived assets;

• loss (gain) on long-lived assets and business interruption recoveries;

• amortization of patient base intangible assets.

These items are generally infrequent or variable in nature, or do not represent current operating activities.

Adjusted Net Income and Adjusted Earnings Per Share

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The table below reconciles income before provision for income taxes to Adjusted EBT for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Consolidated statements of income data:

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Costs incurred related to system implementations

Loss on long-lived assets 1,284 —

2,180 437 5,199 771

Loss (gain) on long-lived assets and business interruption recoveries — (1,000) 1,284 (1,000)

Acquisition related costs (1)

519 654 800 1,135

Depreciation and amortization - patient base (2)

— 409 — 1,020

$ 152,539 $ 124,520 $ 299,590 $ 243,250

(1) Represents costs incurred to acquire operations that are not capitalizable.

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The table below reconciles net income to adjusted net income and diluted earnings per share to adjusted earnings per share for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Net income attributable to The Ensign Group, Inc.

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Costs incurred related to system implementations 2,180 437 5,199 771

Loss on long-lived assets 1,284 —

Loss (gain) on long-lived assets and business interruption recoveries — (1,000) 1,284 (1,000)

Acquisition related costs (1)

519 654 800 1,135

Depreciation and amortization - patient base (2)

— 409 — 1,020

Provision for income taxes on Non-GAAP adjustments (3)

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The table below reconciles net income to EBITDA, Adjusted EBITDA and Adjusted EBITDAR for the periods presented:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2026 2025 2026 2025

Consolidated statements of income data:

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Net income attributable to noncontrolling interests

96 70 184 146

Interest income

4,633 5,240 11,169 12,123

Provision for income taxes

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Costs incurred related to system implementations 2,180 437 5,199 771

Loss on long-lived assets 1,284 —

Loss (gain) on long-lived assets and business interruption recoveries — (1,000) 1,284 (1,000)

Acquisition related costs (1)

519 654 800 1,135

ADJUSTED EBITDA

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ADJUSTED EBITDAR

$ 247,561 $ 484,227

(1) Represents costs incurred to acquire operations that are not capitalizable.

Three Months Ended March 31, 2026 Compared to the Three Months Ended March 31, 2025

Three Months Ended June 30, 2026 Compared to the Three Months Ended June 30, 2025

The following tables set forth details of operating results for our revenue and earnings, and their respective components, by our reportable segments for the periods indicated:

Three Months Ended March 31, 2026

Three Months Ended June 30, 2026

Skilled services Standard Bearer All Other Eliminations Consolidated

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Income before provision for income taxes $ 133,674

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

Skilled services Standard Bearer All Other Eliminations Consolidated

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Income before provision for income taxes $ 112,358

Our total revenue increased by $216.2 million, or 18.4%, compared to the three months ended March 31, 2025.

The increase in revenue was primarily driven by increases in occupancy of 2.3% and 3.8% from our skilled services in Same Facilities and Transitioning Facilities, respectively, coupled with increasing daily revenue rates and the impact of acquisitions.

In addition, our Recently Acquired Facilities revenue increased by $128.0 million, when compared to the same period in 2025.

Our total revenue increased by $212.7 million, or 17.3%, compared to the three months ended June 30, 2025.

The increase in revenue was primarily driven by occupancy growth of 2.7% and 2.3% from our skilled services in Same Facilities and Transitioning Facilities, respectively, as well as higher patient acuity.

In addition, contributions from our acquisitions increased our Recently Acquired Facilities revenue by $133.5 million, when compared to the same period in 2025.

Skilled Services

The following tables present the skilled services revenue and key performance metrics by category during the three months ended March 31, 2026 and 2025:

Three Months Ended March 31,

The following tables present the skilled services revenue and key performance metrics by category during the three months ended June 30, 2026 and 2025:

Three Months Ended June 30,

2026 2025 Change % Change

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Number of campuses at period end (1)

32 30 2 6.7 %

Actual patient days 3,017,641 2,615,490 402,151 15.4 %

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Skilled mix by nursing revenue 50.0 % 49.2 % 0.8 % 1.6 %

Three Months Ended March 31,

Three Months Ended June 30,

2026 2025 Change % Change

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Skilled mix by nursing revenue 51.0 % 50.1 % 0.9 % 1.8 %

Three Months Ended March 31,

Three Months Ended June 30,

2026 2025 Change % Change

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Skilled mix by nursing revenue 49.7 % 47.0 % 2.7 % 5.7 %

Three Months Ended March 31,

Three Months Ended June 30,

2026 2025 Change % Change

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Revenue and expenses related to skilled nursing and senior living services have been allocated and recorded in the respective operating segment.

(2) Same Facility results represent all facilities purchased prior to January 1, 2023.

(3) Transitioning Facility results represent all facilities purchased from January 1, 2023 to December 31, 2024.

(4) Recently Acquired Facility results represent all facilities purchased on or subsequent to January 1, 2025.

Skilled services revenue increased by $207.3 million, or 18.4%, compared to the three months ended March 31, 2025.

(2) Same Facility results represent all facilities acquired prior to January 1, 2023.

(3) Transitioning Facility results represent all facilities acquired from January 1, 2023 to December 31, 2024.

(4) Recently Acquired Facility results represent all facilities acquired on or subsequent to January 1, 2025.

Skilled services revenue increased by $206.3 million, or 17.6%, compared to the three months ended June 30, 2025.

The increases in skilled services revenue were across all payer types, primarily driven by strong occupancy across our skilled services operations.

Our consolidated occupancy increased by 2.6% to 84.0%, during the three months ended March 31, 2026 compared to the same period in 2025, with an increase in skilled days from our operations within Same Facilities and Transitioning Facilities.

Revenue in our Same Facilities increased by $62.7 million, or 6.8%, compared to the three months ended March 31, 2025, due to increased occupancy from skilled days and revenue per patient day.

Our consolidated occupancy increased by 2.0% to 82.9%, during the three months ended June 30, 2026 compared to the same period in 2025, with an increase in skilled days from our operations within Same Facilities and Transitioning Facilities.

Revenue in our Same Facilities increased by $61.5 million, or 6.6%, compared to the three months ended June 30, 2025, due to increased occupancy from skilled days and revenue per patient day.

Our continuous efforts to strengthen our partnerships with various managed care organizations, hospitals and local communities, increased our managed care revenue by 6.1%, resulting from an increase in managed care days and revenue per patient day.

In addition to our growing Medicare Advantage market, we experienced meaningful growth in our Medicare patient base.

Revenue in our Transitioning Facilities increased by $16.6 million, or 9.3%, compared to the three months ended March 31, 2025, due to improved occupancy growth, increases in skilled mix days and revenue per patient day, across all payors.

Revenue in our Transitioning Facilities increased by $11.4 million, or 6.1%, compared to the three months ended June 30, 2025, due to improved occupancy growth, increases in skilled mix days and revenue per patient day, across all payors.

The increases reflect our operational fundamentals as we continue to transition and integrate these facilities.

Revenue in our Recently Acquired Facilities increased by approximately $128.0 million compared to three months ended March 31, 2025.

The 34 operational expansions between April 1, 2025 and March 31, 2026 across 11 states contributed $109.8 million of the total increase.

Historically, we have generally experienced lower occupancy rates and lower skilled mix at Recently Acquired Facilities and therefore, we anticipate lower overall occupancy during years of growth.

In the future, if we acquire additional turnaround or start-up operations, we expect to see lower occupancy rates and skilled mix and these metrics are expected to vary from period to period based upon the type of facilities and operations that we acquire.

Revenue in our Recently Acquired Facilities increased by approximately $133.5 million compared to three months ended June 30, 2025.

The 46 operational expansions between July 1, 2025 and June 30, 2026 across 10 states contributed $120.1 million of the total increase.

Recently Acquired Facilities generally have lower occupancy and skilled mix levels, which may temporarily reduce our overall operating metrics following an acquisition.

The following table reflects the change in skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate (1) :

Three Months Ended March 31,

Three Months Ended June 30,

Same Facility Transitioning Acquisitions Total

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(1) The rates are based on contractually agreed-upon amounts or rates, excluding the estimates of variable consideration under the revenue recognition standard, Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 606.

Our Medicare daily rates at Same Facilities and Transitioning Facilities increased by 4.4% and 4.7%, respectively, compared to the three months ended March 31, 2025.

Our Medicare daily rates at Same Facilities and Transitioning Facilities increased by 4.5% and 4.2%, respectively, compared to the three months ended June 30, 2025.

The increase is attributable to the 3.2% net market basket increase that became effective in October 2025 as well as a shift toward higher acuity patients.

As hospitals continue to discharge individuals with more complex medical conditions to skilled nursing facilities, we are experiencing a greater proportion of higher acuity patients, which necessitates more advanced and specialized care.

Our average Medicaid rates increased 5.2%, compared to the three months ended March 31, 2025, due to state reimbursement increases and our participation in Medicaid supplemental payment and quality improvement programs in various states.

Our managed care daily rates at Same Facilities and Transitioning Facilities increased by 4.1% and 8.0%, respectively, compared to the three months ended June 30, 2025.

The increase in managed care daily rates was primarily driven by our continued focus on developing strong relationships as well as the achievement of clinical outcomes, resulting in a shift to high acuity patients.

Our Medicaid daily rates at Same Facilities and Transitioning Facilities increased by 2.7% and 1.6%, respectively, compared to the three months ended June 30, 2025, due to state reimbursement increases and our participation in Medicaid supplemental payment and quality improvement programs in various states.

Payor Sources as a Percentage of Skilled Nursing Services.

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The following tables set forth our percentage of skilled nursing patient revenue and days by payor source:

Three Months Ended March 31,

Three Months Ended June 30,

Same Facility Transitioning Acquisitions Total

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100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Three Months Ended March 31,

Three Months Ended June 30,

Same Facility Transitioning Acquisitions Total

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The following table sets forth total cost of services for our skilled services segment for the periods indicated (dollars in thousands):

Three Months Ended March 31, Change

Three Months Ended June 30, Change

2026 2025 $ %

Cost of service $ 1,052,724 $ 891,855 $ 160,869 18.0 %

Cost of services

$ 1,089,109 $ 932,823 $ 156,286 16.8 %

Revenue percentage 78.9 % 79.5 % (0.6) %

Cost of services related to our skilled services segment increased by $160.9 million, or 18.0%, from the same period in 2025.

Cost of services as a percentage of revenue decreased by 0.3% to 79.1% reflecting continued cost management, a shift towards higher acuity as we serve more clinically complex patients, and improving operational performance at our newer acquisitions.

In addition, our cost of services as a percentage of revenue varies depending on the volume of acquisitions during the period, which typically have higher costs during the transition period.

Cost of services related to our skilled services segment increased by $156.3 million, or 16.8%, from the same period in 2025, primarily due to growth in operations, including acquisitions, and higher patient volumes.

Cost of services as a percentage of revenue decreased by 0.6% to 78.9%, primarily reflecting ancillary cost efficiencies achieved through our integrated clinical and therapy model and improved labor costs, including lower agency expenses.

Cost of services as a percentage of revenue may fluctuate from period to period based on the timing and volume of acquisitions, as newly acquired operations typically experience higher costs during their initial transition period.

In addition, cost of services for the three months ended June 30, 2026 includes $3.9 million of expenses associated with our deferred compensation plan, which directly offsets the corresponding investment gains recorded in Other income, net .

Without the deferred compensation plan expense, cost of services expense as a percentage of revenue would be 78.6%.

Standard Bearer

Three Months Ended March 31, Change

Three Months Ended June 30, Change

2026 2025 $ %

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$ 24,746 $ 18,391 $ 6,355 34.6 %

Rental revenue — Our rental revenue, including revenue generated from our independent subsidiaries, increased by $7.7 million, or 27.1%, to $36.1 million, compared to the three months ended March 31, 2025.

The increase in revenue is primarily attributable to 19 real estate purchases, as well as annual rent increases since the three months ended March 31, 2025.

FFO — Our FFO increased by $4.5 million, or 26.6%, to $21.6 million, compared to the three months ended March 31, 2025.

Rental revenue — Our rental revenue, including revenue generated from our independent subsidiaries, increased by $12.7 million, or 40.2%, to $44.1 million, compared to the three months ended June 30, 2025.

The increase in revenue is primarily attributable to 37 real estate purchases, as well as annual rent increases since the three months ended June 30, 2025.

For the three months ended June 30, 2026, rental revenue generated from third-party tenants included $1.0 million of rental income earned from acquired real estate properties during the period prior to their lease to our independent operating subsidiaries on May 1, 2026.

FFO — Our FFO increased by $6.4 million, or 34.6%, to $24.7 million, compared to the three months ended June 30, 2025.

The increase in rental revenue of $12.7 million was offset by increases in interest expense of $5.1 million associated with the debt agreements between Standard Bearer and us as Standard Bearer continues to grow its real estate portfolio.

All Other Revenue

Our other revenue increased by $9.8 million, or 18.8%, to $62.3 million, compared to the three months ended March 31, 2025.

Our other revenue increased by $6.9 million, or 12.1%, to $64.3 million, compared to the three months ended June 30, 2025.

Other revenue includes senior living revenue of $31.2 million, revenue from other ancillary services of $29.9 million and rental income of $3.2 million.

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General and administrative expense — General and administrative expense increased $16.8 million or 24.3%, to $85.9 million.

This increase was primarily driven by additional headcount due to acquisition activities, increases in wages and benefits due to enhanced performance and growth and costs incurred related to our system implementation.

General and administrative expense as a percentage of revenue remained consistent at 5.3%.

The increase was also driven by costs incurred in connection with our system implementation.

General and administrative expense as a percentage of revenue increased by 0.4% to 6.0%.

General and administrative expense for the three months ended June 30, 2026 includes $3.9 million of expenses associated with our deferred compensation plan, which directly offsets the corresponding investment gains recorded in Other income, net .

Without the deferred compensation plan expense, general and administrative expense as a percentage of revenue would be 5.7%.

Depreciation and amortization — Depreciation and amortization expense increased $5.6 million, or 21.8%, to $31.4 million.

This increase was primarily related to the additional depreciation incurred as a result of our newly acquired operations, which have a greater mix of real estate purchases than leases, and capital investments.

Depreciation and amortization expense remained consistent at 2.1%, as a percentage of revenue.

This increase was primarily related to additional depreciation incurred as a result of our newly acquired operations, which have a greater mix of real estate purchases than leases, and capital investments.

Depreciation and amortization increased 0.2%, to 2.2%, as a percentage of revenue.

Other income, net — Other income, net primarily includes interest income from our investments, interest expense related to our debt and deferred compensation gains and losses.

Other income, net decreased by $1.5 million due primarily due to a $1.7 million loss on our deferred compensation plan and a decrease in interest income of $0.3 million as we utilized our cash on hand to fund more real estate purchases during the period coupled with a lower interest rate environment.

During the three months ended June 30, 2026 and 2025, the deferred compensation plan had gains of $7.6 million and $4.5 million, respectively, with an offsetting expense allocated between cost of services and general and administrative expenses.

Other income, net increased primarily due to an increase in the gain on our deferred compensation plan offset by a decrease in interest income of $0.6 million as we utilized our cash on hand to fund more real estate purchases during the period.

Changes in our deferred compensation plan are a result of gains or losses depending on market performance.

Other income, net as a percentage of revenue decreased by 0.1%.

Provision for income taxes — Our effective tax rate was 22.4% for the three months ended March 31, 2026, compared to 24.6% for the same period in 2025.

Other income, net as a percentage of revenue increased by 0.1%.

Provision for income taxes — Our effective tax rate was 25.3% for the three months ended June 30, 2026, compared to 24.8% for the same period in 2025.

The effective tax rate for both periods was driven by the impact of excess tax benefits from stock-based compensation, partially offset by non-deductible expenses including non-deductible compensation.

See Note 12, Income Taxes , in the Notes to the Interim Financial Statements for further discussion.

Six Months Ended June 30, 2026 Compared to the Six Months Ended June 30, 2025

The following tables set forth details of operating results for our revenue and earnings, and their respective components, by our reportable segment for the periods indicated.

Six Months Ended June 30, 2026

Skilled Services Standard Bearer All Other Eliminations Consolidated

Total revenue $ 2,710,747 $ 80,235 $ 126,524 $ (87,829) $ 2,829,677

Total expenses, including other income, net

2,357,109 57,356 240,795 (87,829) 2,567,431

Segment income (loss) 353,638 22,879 (114,271) — 262,246

Income before provision for income taxes $ 262,246

Six Months Ended June 30, 2025

Skilled Services Standard Bearer All Other Eliminations Consolidated

Total revenue $ 2,297,130 $ 59,869 $ 109,758 $ (65,947) $ 2,400,810

Total expenses, including other income, net

2,003,195 42,160 202,464 (65,947) 2,181,872

Segment income (loss) 293,935 17,709 (92,706) — 218,938

Income before provision for income taxes $ 218,938

Our total revenue increased by $428.9 million, or 17.9%, compared to the six months ended June 30, 2025.

The increase in revenue was primarily driven by an increase in occupancy of 2.6% and 3.0% from our skilled services in Same Facilities and Transitioning Facilities, respectively, as well as higher patient acuity.

In addition, contributions from our acquisitions increased our Recently Acquired Facilities revenue by $261.5 million, when compared to the same period in 2025.

The following tables present the skilled services revenue and key performance metrics by category during the six months ended June 30, 2026 and 2025:

Six Months Ended June 30,

2026 2025 Change % Change

TOTAL FACILITY RESULTS:

(Dollars in thousands)

Skilled services revenue $ 2,710,747 $ 2,297,130 $ 413,617 18.0 %

Number of facilities at period end 348 304 44 14.5 %

Number of campuses at period end (1)

32 30 2 6.7 %

Actual patient days 5,913,675 5,153,626 760,049 14.7 %

Occupancy percentage — Operational beds 83.4 % 81.6 % 1.8 % 2.2 %

Skilled mix by nursing days 31.5 % 31.1 % 0.4 % 1.3 %

Skilled mix by nursing revenue 50.3 % 49.7 % 0.6 % 1.2 %

Six Months Ended June 30,

2026 2025 Change % Change

SAME FACILITY RESULTS:

(Dollars in thousands)

Skilled services revenue

$ 1,967,545 $ 1,843,338 $ 124,207 6.7 %

Number of facilities at period end 234 234 — — %

Number of campuses at period end (1)

Actual patient days 4,309,728 4,170,184 139,544 3.3 %

Occupancy percentage — Operational beds 84.2 % 82.1 % 2.1 % 2.6 %

Skilled mix by nursing days 32.4 % 31.8 % 0.6 % 1.9 %

Skilled mix by nursing revenue 51.1 % 50.6 % 0.5 % 1.0 %

Six Months Ended June 30,

2026 2025 Change % Change

TRANSITIONING FACILITY RESULTS:

(Dollars in thousands)

Skilled services revenue

$ 392,857 $ 364,903 $ 27,954 7.7 %

Number of facilities at period end 50 50 — — %

Number of campuses at period end (1)

Actual patient days 807,732 778,169 29,563 3.8 %

Occupancy percentage — Operational beds 84.9 % 82.4 % 2.5 % 3.0 %

Skilled mix by nursing days 29.9 % 28.4 % 1.5 % 5.3 %

Skilled mix by nursing revenue 49.7 % 47.6 % 2.1 % 4.4 %

Six Months Ended June 30,

2026 2025 Change % Change

RECENTLY ACQUIRED FACILITY RESULTS:

(Dollars in thousands)

Skilled services revenue

$ 350,345 $ 88,889 $ 261,456 NM

Number of facilities at period end 64 20 44 NM

Number of campuses at period end (1)

Actual patient days 796,215 205,273 590,942 NM

Occupancy percentage — Operational beds 78.3 % 70.0 % NM NM

Skilled mix by nursing days 28.5 % 27.7 % NM NM

Skilled mix by nursing revenue 46.8 % 39.9 % NM NM

(1) Campus represents a facility that offers both skilled nursing and senior living services.

Revenue and expenses related to skilled nursing and senior living services have been allocated and recorded in the respective operating segment.

(2) Same Facility results represent all facilities acquired prior to January 1, 2023.

(3) Transitioning Facility results represent all facilities acquired from January 1, 2023 to December 31, 2024.

(4) Recently Acquired Facility results represent all facilities acquired on or subsequent to January 1, 2025.

Skilled services revenue increased $413.6 million, or 18.0%, compared to the six months ended June 30, 2025.

The increases in skilled services revenue were across all payer types, primarily driven by strong occupancy across our skilled services operations.

Our consolidated occupancy increased by 2.2% to 83.4% during the six months ended June 30, 2026 compared to the same period in 2025, compounded by a shift to skilled days for our Same Facilities and Transitioning Facilities.

Revenue in our Same Facilities increased $124.2 million, or 6.7%, compared to the six months ended June 30, 2025, due to increased occupancy from strong skilled days and revenue per patient day.

Revenue in our Transitioning Facilities increased $28.0 million, or 7.7%, compared to the six months ended June 30, 2025, due to improved occupancy growth, increases in skilled mix days and revenue per patient day, across all payors.

The increases reflect our operational fundamentals as we continue to transition and integrate these facilities.

Revenue in our Recently Acquired Facilities increased $261.5 million, compared to the six months ended June 30, 2025.

The 46 operational expansions between July 1, 2025 and June 30, 2026 across 10 states contributed $206.8 million of the total increase.

Recently Acquired Facilities generally have lower occupancy and skilled mix levels, which may temporarily reduce our overall operating metrics following an acquisition.

The following table reflects the change in skilled nursing average daily revenue rates by payor source, excluding services that are not covered by the daily rate (1) :

Six Months Ended June 30,

Same Facility Transitioning Acquisitions Total

2026 2025 2026 2025 2026 2025 2026 2025

SKILLED NURSING AVERAGE DAILY REVENUE RATES

Medicare $ 812.17 $ 777.70 $ 885.86 $ 848.13 $ 796.67 $ 667.40 $ 822.04 $ 786.58

Managed care 594.97 570.02 652.52 605.80 627.83 522.15 604.67 572.51

Other skilled 646.93 645.85 680.76 668.45 659.88 714.24 651.51 650.67

Total skilled revenue 682.14 657.16 773.10 739.60 714.40 621.17 697.78 667.17

Medicaid 311.49 299.67 328.56 316.93 318.27 356.51 314.77 304.65

Private and other payors 314.74 289.10 365.97 354.74 348.25 364.34 327.66 303.52

Total skilled nursing revenue

$ 431.75 $ 412.14 $ 465.42 $ 441.17 $ 434.75 $ 430.70 $ 436.73 $ 417.23

Our Medicare daily rates at Same Facilities and Transitioning Facilities both increased by 4.4% compared to the six months ended June 30, 2025.

The increases are attributable to the 3.2% net market basket increase that became effective October 2025 as well as a shift toward higher acuity patients.

Our managed care daily rates at Same Facilities and Transitioning Facilities increased by 4.4% and 7.7%, respectively, compared to the six months ended June 30, 2025.

The increase in managed care daily rates was primarily driven by our continued focus on clinical outcomes, resulting in shift to higher acuity patients.

Our Medicaid daily rates at Same Facilities and Transitioning Facilities increased by 3.9% and 3.7%, respectively, compared to the six months ended June 30, 2025, due to state reimbursement increases, our participation in Medicaid supplemental payment and quality improvement programs in various states.

Percentage of Skilled Nursing Services — We use our skilled mix as a measure of the quality of reimbursements we receive at our independent skilled nursing facilities over various periods.

The following tables set forth our percentage of skilled nursing patient revenue and days:

Six Months Ended June 30,

Same Facility Transitioning Acquisitions Total

2026 2025 2026 2025 2026 2025 2026 2025

PERCENTAGE OF SKILLED NURSING REVENUE

Medicare 21.4 % 21.1 % 28.4 % 28.4 % 25.2 % 18.2 % 23.0 % 22.2 %

Managed care 19.7 20.4 14.9 14.0 14.9 12.8 18.4 19.1

Other skilled 10.0 9.1 6.4 5.2 6.7 8.9 8.9 8.4

Skilled mix 51.1 % 50.6 % 49.7 % 47.6 % 46.8 % 39.9 % 50.3 % 49.7 %

Private and other payors 7.0 6.9 8.3 9.0 9.9 10.3 7.6 7.4

Medicaid 41.9 42.5 42.0 43.4 43.3 49.8 42.1 42.9

TOTAL SKILLED NURSING 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Six Months Ended June 30,

Same Facility Transitioning Acquisitions Total

2026 2025 2026 2025 2026 2025 2026 2025

PERCENTAGE OF SKILLED NURSING DAYS

Medicare 11.4 % 11.2 % 14.9 % 14.8 % 13.8 % 11.8 % 12.2 % 11.8 %

Managed care 14.3 14.7 10.6 10.2 10.4 10.5 13.3 13.9

Other skilled 6.7 5.9 4.4 3.4 4.3 5.4 6.0 5.4

Skilled mix 32.4 % 31.8 % 29.9 % 28.4 % 28.5 % 27.7 % 31.5 % 31.1 %

Private and other payors 9.5 9.8 10.6 11.2 12.4 12.2 10.0 10.1

Medicaid 58.1 58.4 59.5 60.4 59.1 60.1 58.5 58.8

TOTAL SKILLED NURSING 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 % 100.0 %

Cost of Services

The following table sets forth total cost of services for our skilled services segment for the periods indicated (dollars in thousands):

Six Months Ended June 30, Change

2026 2025 $ %

Cost of services $ 2,141,833 $ 1,824,678 $ 317,155 17.4 %

Revenue percentage 79.0 % 79.4 % (0.4) %

Cost of services related to our skilled services segment increased by $317.2 million, or 17.4%, from the same period in 2025, primarily due to growth in operations, including acquisitions, and higher patient volumes.

Cost of services as a percentage of revenue decreased by 0.4% to 79.0%, primarily reflecting ancillary cost efficiencies achieved through our integrated clinical and therapy model and improved labor costs, including lower agency expenses.

In addition, cost of services for the six months ended June 30, 2026 includes $3.1 million of expenses associated with our deferred compensation plan, which directly offsets the corresponding investment gains recorded in Other income, net .

Without the deferred compensation plan expense, cost of services expense as a percentage of revenue would be 78.7%.

Standard Bearer

Six Months Ended June 30, Change

2026 2025 $ %

(Dollars in thousands)

Rental revenue generated from third-party tenants $ 11,618 $ 9,209 $ 2,409 26.2 %

Rental revenue generated from Ensign's independent subsidiaries

68,617 50,660 17,957 35.4

TOTAL RENTAL REVENUE $ 80,235 $ 59,869 $ 20,366 34.0 %

Segment income 22,879 17,709 5,170 29.2

Depreciation and amortization 23,459 17,741 5,718 32.2

FFO $ 46,338 $ 35,450 $ 10,888 30.7 %

Rental revenue — Our rental revenue, including revenue generated from our independent subsidiaries, increased by $20.4 million, or 34.0%, to $80.2 million, compared to the six months ended June 30, 2025.

The increase in revenue is primarily attributable to 37 real estate purchases, as well as annual rent increases since the six months ended June 30, 2025.

For the six months ended June 30, 2026, rental revenue generated from third-party tenants included $1.0 million of rental income earned from acquired real estate properties during the period prior to their lease to our independent operating subsidiaries on May 1, 2026.

FFO — Our FFO increased by $10.9 million, or 30.7%, to $46.3 million, compared to the six months ended June 30, 2025.

The increase in rental revenue of $20.4 million is offset by increases in interest expense of $7.9 million associated with the debt arrangements between Standard Bearer and us as Standard Bearer continues to grow its real estate portfolio.

All Other Revenue

Our other revenue increased by $16.8 million, or 15.3%, to $126.5 million, compared to the six months ended June 30, 2025.

Other revenue for the six months ended June 30, 2026 includes senior living revenue of $61.8 million, revenue from other ancillary services of $58.3 million and rental income of $6.4 million.

The increase in other revenue is primarily attributable to growth in our other ancillary services.

Consolidated Financial Expenses

Rent-cost of services — Our rent-cost of services as a percentage of revenue decreased by 0.1% to 4.7%, as the expansions in our footprint have resulted from more real estate purchases than leased properties.

General and administrative expense — General and administrative expense increased by $28.5 million or 21.6%, to $160.1 million.

The increase was also driven by costs incurred related to our system implementation.

General and administrative expense as a percentage of revenue increased by 0.2% to 5.7%.

General and administrative expense for the six months ended June 30, 2026 includes $3.1 million of expenses associated with our deferred compensation plan, which directly offsets the corresponding investment gains recorded in Other income, net .

Without the deferred compensation plan expense, general and administrative expense as a percentage of revenue would be 5.6%.

Depreciation and amortization — Depreciation and amortization expense increased by $10.2 million, or 20.5%, to $60.2 million.

This increase was primarily related to the additional depreciation and amortization incurred as a result of our newly acquired operations, which have a greater mix of real estate purchases than leases, and capital investments.

Depreciation and amortization increased 0.1%, to 2.1%, as a percentage of revenue.

Other income, net — Other income primarily includes interest income from our investments, interest expense related to our debt and deferred compensation gains and losses.

During the six months ended June 30, 2026 and 2025, the deferred compensation investment program had a gains of $5.9 million and $4.2 million, respectively, with an offsetting expenses or reduction in expenses are allocated between cost of services and general and administrative expenses.

Other income, net increased by $1.2 million primarily due to an increase in the gain on our deferred compensation plan offset by a decrease in interest income of $1.0 million as we utilized our cash on hand to fund more real estate purchases during the period.

Changes in our deferred compensation plan are a result of gains or losses depending on market performance.

Other income, net as a percentage of revenue decreased by 0.1%.

Provision for income taxes — Our effective tax rate was 23.9% for the six months ended June 30, 2026, compared to 24.7% for the same period in 2025.

The effective tax rate for both periods was driven by the impact of excess tax benefits from stock-based compensation, partially offset by non-deductible expenses, including non-deductible compensation.

See Note 12, Income Taxes , in the Interim Financial Statements for further discussion.

Liquidity and Capital Resources

Our principal sources of liquidity have historically been derived from our cash flows from operations, long-term debt secured by our real property and borrowings under our Credit Facility (defined below).

Our liquidity as of March 31, 2026 is impacted by cash generated from strong operational performance offset by our real estate acquisitions, as well as capital expenditures to improve the quality of care at our existing operations.

Our liquidity as of June 30, 2026 is impacted by cash generated from strong operational performance offset by our real estate acquisitions, as well as capital expenditures to improve the quality of care at our existing operations.

Historically, we have primarily financed the majority of our acquisitions through cash generated from operations, mortgages on our properties and our Credit Facility.

Cash paid to fund acquisitions was $28.7 million for the three months ended March 31, 2026 compared to $194.2 million for the three months ended March 31, 2025.

Total capital expenditures for property and equipment were $35.5 million and $42.9 million for the three months ended March 31, 2026 and 2025, respectively.

Cash paid to fund acquisitions was $376.0 million for the six months ended June 30, 2026 compared to $213.6 million for the six months ended June 30, 2025.

Total capital expenditures for property and equipment were $88.3 million and $92.5 million for the six months ended June 30, 2026 and 2025, respectively.

We currently have approximately $175.0 million budgeted for renovation projects in 2026.

As further discussed in Recent Activities , during the three months ended March 31, 2026, we entered into definitive agreements to acquire real estate assets associated with 19 operations subsequent to March 31, 2026, subject to customary closing conditions, for an aggregate purchase price of approximately $342.4 million.

Our cash and cash equivalents of approximately $539.5 million as of March 31, 2026 consisted of bank deposits and money market funds.

In addition, as of March 31, 2026, we held investments of approximately $250.0 million.

We believe our investments that were in an unrealized loss position as of March 31, 2026 do not require an allowance for expected credit losses, nor has any event occurred subsequent to that date that would indicate so.

Our cash and cash equivalents of $262.3 million as of June 30, 2026 consisted of bank deposits and money market funds.

In addition, as of June 30, 2026, we held investments of $268.6 million.

We believe our investments that were in an unrealized loss position as of June 30, 2026 do not require an allowance for expected credit losses, nor has any event occurred subsequent to that date that would indicate so.

We may, in the future, seek to raise additional capital to fund growth, capital renovations, operations and other business activities, but such additional capital may not be available on acceptable terms, on a timely basis, or at all.

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Our positive cash flows have supported our business and have allowed us to pay regular dividends to our stockholders.

We currently anticipate that existing cash and total investments as of March 31, 2026, along with projected operating cash flows and available financing, will support our normal business operations for the foreseeable future.

We currently anticipate that existing cash and total investments as of June 30, 2026, along with projected operating cash flows and available financing, will support our normal business operations for the foreseeable future.

Share Repurchases

On May 13, 2026, the Board of Directors approved a stock repurchase program pursuant to which we are authorized to repurchase up to $40.0 million of our common stock under the program for a period of approximately 12 months from June 12, 2026.

During the three months ended March 31, 2026, we did not repurchase any shares pursuant to this stock repurchase program.

As of March 31, 2026, the full $20.0 million authorized for repurchase remained available under the stock repurchase program.

Under our repurchase program, we are authorized to repurchase our issued and outstanding common shares from time to time in open-market and privately negotiated transactions, tender offers, pursuant to contractual provisions, and block trades, or otherwise in accordance with federal securities laws.

During the three months ended June 30, 2026, we repurchased 257 shares of our common stock for $40.0 million.

As of June 30, 2026, $60.0 million remains authorized and available for repurchase under the stock repurchase program.

On May 15, 2025, the Board of Directors approved a stock repurchase program pursuant to which we are authorized to repurchase up to $20.0 million of our common stock under the program for a period of approximately 12 months from June 16, 2025.

The stock repurchase program expired on June 16, 2026 and is no longer in effect.

We did not repurchase any shares pursuant to this stock repurchase program.

Under each of our repurchase programs, we are authorized to repurchase our issued and outstanding common shares from time to time in open-market and privately negotiated transactions, tender offers, pursuant to contractual provisions, and block trades, or otherwise in accordance with federal securities laws.

The stock repurchase program does not obligate us to acquire any specific number of shares.

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The following table presents selected data from our condensed consolidated statement of cash flows for the periods presented:

Three Months Ended March 31,

Six Months Ended June 30,

NET CASH PROVIDED BY (USED IN):

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Financing activities (34,796) (16,655)

Net increase (decrease) in cash and cash equivalents $ 35,617 $ (181,932)

Net decrease in cash and cash equivalents $ (241,581) $ (100,629)

Cash and cash equivalents beginning of period 503,881 464,598

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Cash provided by operating activities is net income adjusted for certain non-cash items and changes in operating assets and liabilities.

The $27.9 million increase in cash provided by operating activities for the three months ended March 31, 2026 compared to the same period in 2025 w as due to an increase in operational performance offset by timing of payments.

The $44.2 million increase in cash provided by operating activities for the six months ended June 30, 2026 compared to the same period in 2025 w as due to an increase in operational performance offset by timing of payments.

Investing Activities

Investing cash flows consist primarily of capital expenditures, investment activities, insurance proceeds and cash used for acquisitions.

The $172.6 million decrease in cash used in investing activities for the three months ended March 31, 2026 compared to the same period in 2025 was primarily attributable to fewer acquisitions and reduced capital expenditures, partially offset by maturities of our investments.

The $167.0 million increase in cash used in investing activities for the six months ended June 30, 2026 compared to the same period in 2025 was primarily used for acquisitions, partially offset by maturities of our investments and reduced capital expenditures.

Financing Activities

Financing cash flows consist primarily of cash provided by the issuance of common stock upon exercise of stock options, payment of dividends to stockholders, issuance and repayment of short-term and long-term debt and payment for share repurchases.

The $17.0 million increase in cash provided by financing activities for the three months ended March 31, 2026 compared to the same period in 2025, was primarily attributable to increased cash proceeds from the exercise of stock options in 2026 and share repurchase activity in 2025 under our stock repurchase program that did not recur in 2026.

The $18.1 million increase i n cash used in financing activities for the six months ended June 30, 2026 compared to the same period in 2025, was primarily driven by higher common stock repurchases, which totaled $40.0 million in 2026 versus $20.0 million in 2025.

Credit Facility with a Lending Consortium Arranged by Truist

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Mortgage Loans and Promissory Note

As of March 31, 2026, 23 of our subsidiaries had mortgage loans insured with HUD for an aggregate amount of $142.6 million, which subjects these subsidiaries to HUD oversight and periodic inspections.

As of June 30, 2026, 23 of our subsidiaries had mortgage loans insured with HUD for an aggregate amount of $141.7 million, which subjects these subsidiaries to HUD oversight and periodic inspections.

The mortgage loans bear effective interest rates at a range of 3.1% to 4.2%, including fixed interest rates at a range of 2.4% to 3.3% per annum.

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The note, which was used for an acquisition, is secured by the real property comprising the facility and the rent, issues and profits thereof, as well as all personal property used in the operation of the facility.

While the mortgage loans and promissory note requires ongoing principal and interest payments over their respective terms, we currently expect these obligations to be satisfied through cash from ongoing operations.

While the mortgage loans and promissory note require ongoing principal and interest payments over their respective terms, we currently expect these obligations to be satisfied through cash from ongoing operations.

Operating Leases

As of March 31, 2026, 254 of our facilities have long-term lease arrangements, of which 104 of the operations are under eight triple-net Master Leases with CareTrust.

As of June 30, 2026, 254 of our facilities have long-term lease arrangements, of which 103 of the operations are under eight triple-net Master Leases with CareTrust.

The Master Leases consist of multiple leases, each with its own pool of properties, that have varying maturities and diversity in property geography.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis